Tax in Bosnia and Herzegovina (2026): VAT and Income Tax

VAT: the state-level tax

The Indirect Taxation Authority says the single state level VAT system replaces the entity level sale tax, and that it is the single institution responsible for calculation and collection of VAT. It says the Law on Value Added Tax has applied since 1st January 2006, with a unique tax rate of 17% and 0% VAT provided only for exports. A taxpayer who purchases goods from abroad must pay VAT when the goods are imported. The exempt activities it lists include medical and healthcare services, services of education, and the leasing and sub-letting of residential premises for a period of longer than 60 days.

uino.gov.ba: VAT (Indirect Taxation Authority of Bosnia and Herzegovina) uino.gov.ba: General information on VAT system in Bosnia and Herzegovina

Federation of BiH: rate and residence

The Federation of BiH Law on Income Tax says income tax is paid at a rate of 10%. Among the persons it treats as residents are people who have residence in the Federation and people who stay there, continuously or with interruptions, for 183 or more days in any tax period. By way of exception, it also treats as residents people who have residence in Republika Srpska or the Brčko District and earn income from employment with employers seated in the Federation. A non-resident has no residence and no permanent place of stay in the Federation and stays there fewer than 183 days. The Federation's residency rulebook says only days of physical presence count in the 183 days, and days of arrival and departure are included.

fmf.gov.ba: Zakon o porezu na dohodak (Law on Income Tax, Federation of BiH, unofficial consolidated text) pufbih.ba: Pravilnik o poreznoj rezidentnosti (rulebook on tax residency, Federation of BiH Tax Administration)

Federation of BiH: deduction and return

Income of residents is reduced by a basic personal deduction of 3,600.00 KM for the tax period, and residents may also deduct 0.5 of it for a dependent spouse. The annual tax return goes to the competent unit of the Tax Administration of the Federation of BiH by 31 March of the current year for the previous year, and the law requires one from a person with income from several sources or income directly from abroad, without a resident employer. An employee who had income from only one employer and no income from other sources does not have to file it if the employer calculated, withheld and paid the withholding tax on all pay and taxable benefits in that period.

fmf.gov.ba: Zakon o porezu na dohodak (Law on Income Tax, Federation of BiH, unofficial consolidated text)

Federation of BiH: contribution rates

The Federation Law on Contributions sets maximum rates; the consolidated text says its latest amendment (Official Gazette 33/25) applies from 01.07.2025 (1 July). Charged to the insured person, out of the contribution base: 17.00% for pension and disability insurance, 12.50% for basic health insurance, 1.50% for unemployment insurance. Charged to the employer on that base: 2.50%, 2.00% and 0.50%. On the base for entrepreneurs the rates are 19.50%, 14.50% and 2.00%.

pufbih.ba: Zakon o doprinosima (Law on Contributions, Federation of BiH, unofficial consolidated text)

Republika Srpska: residence and filing

The Republika Srpska Law on Income Tax (Official Gazette 60/15) is published in English on the Tax Administration's site; the translation states it has no legal force. It says a resident is a person who has residency in the Republic of Srpska, who resides there for 183 days or more over a period of 12 months commencing or ending in the fiscal year, or who has a permanent place of residence and centre of vital interests there. A taxpayer earning income shall submit a tax return to the Tax Administration of the Republic of Srpska by 31 March of the current year for the previous year, unless otherwise provided. The same article says an employee for whom the employer pays withholding tax need not submit the annual tax return, except if realising income on other grounds. Another article says a resident, other than a qualified investor referred to in Article 43 of that law, who earns income in other parts of Bosnia and Herzegovina or abroad must calculate and pay the withholding tax within seven days of receiving the payment, if the payer has not done so, and file the annual tax return.

poreskaupravars.org: The Law on Income Tax (unofficial English translation, Official Gazette of the Republic of Srpska 60/15)

Republika Srpska: rates and the 2026 change

Amending Law 119/21, in force from 1 January 2022, sets tax rates of 8% on personal income (such as pay), 10% on self-employment income, and 13% on copyright, capital, capital gains and other income. A Tax Administration notice says the income tax and contributions amendments in Official Gazette 114/25 entered into force on 1 January 2026. It says income tax is not paid on a net 50 KM a month of the pay of workers in jobs that require no particular level of education or a completed three-year secondary education; the notice applies this to workers registered with NK, PK, KV or lower qualifications. Its worked example for the monthly withholding return (Form 1002), for a contracted gross pay of 1,800.00 KM, uses contributions of 31%, a personal deduction of 1,000.00 KM and tax of 8%.

en.poreskaupravars.org: Law on Amendments to the Law on Personal Income Tax (unofficial English translation, Official Gazette of the Republic of Srpska 119/21) poreskaupravars.org: The Law on Income Tax (unofficial English translation, Official Gazette of the Republic of Srpska 60/15) poreskaupravars.org: Измјене у подношењу Обрасца 1002 од 01.01.2026. године (changes to Form 1002 from 1 January 2026)

Brčko District: rate and residence

The Brčko District Law on Income Tax says income tax is paid at a rate of 10%. A resident of the District is a person who has residence in the District, who stays there continuously or with interruptions for 183 or more days in any tax period, or who has residence there and earns income from the District budget for employment outside it. By way of exception, the law also treats as a resident a person with residence in either entity (the Federation of BiH or Republika Srpska) who earns income from employment with an employer seated in the District. A non-resident stays fewer than 183 days.

skupstinabd.ba: Zakon o porezu na dohodak (Law on Income Tax, Brčko District, unofficial consolidated text)

Brčko District: deduction and return

A 2022 amendment, applied from 1 August 2022, sets the basic personal deduction at 14,400.00 KM a year, or 1,200.00 KM a month. Under the Brčko law, the annual return goes to the Tax Administration by the end of February for the previous year, and the law requires one from a person with income from several sources or income directly from abroad, without a resident employer; an employee paid by only one employer, with no income from other sources in that period, does not have to file it.

skupstinabd.ba: Zakon o porezu na dohodak (Law on Income Tax, Brčko District, unofficial consolidated text) skupstinabd.ba: Zakon o izmjenama i dopuni Zakona o porezu na dohodak (amending law, Brčko District, 2022)

Tax paid abroad or in another part of BiH

Each of the three laws has a credit rule. The Federation law deducts tax paid in a foreign state or in another territory of Bosnia and Herzegovina from Federation income tax. The Brčko law deducts tax paid in a foreign state or an entity from District income tax. The Republika Srpska law deducts tax paid in other parts of Bosnia and Herzegovina or abroad from its income tax. In each, the reduction cannot exceed the tax calculated at the local rate, and it needs valid documentation certified by the competent authority. The Federation and Brčko laws also give priority to ratified treaties on avoiding double taxation.

fmf.gov.ba: Zakon o porezu na dohodak (Law on Income Tax, Federation of BiH, unofficial consolidated text) skupstinabd.ba: Zakon o porezu na dohodak (Law on Income Tax, Brčko District, unofficial consolidated text) poreskaupravars.org: The Law on Income Tax (unofficial English translation, Official Gazette of the Republic of Srpska 60/15)

What this page does not cover

This page does not cover contribution rates in Republika Srpska and the Brčko District, other Federation contribution rates such as the additional pension contribution, deductions for children and other dependants, how to pay tax on income received directly from abroad during the year, special regimes for small entrepreneurs, small farmers and qualified investors, VAT registration, how non-residents are taxed, tax treaties with specific countries, property taxes, excise duty rates, or how any rule applies to a particular person. Check the official pages for them.